6-23-10

Intro-
It seems like I have to give a title for each post that I create. I guess I'll start with the date and if something interesting or exciting is coming up I'll include it in the title. Until then I'll just post the date.
In order to get a degree to become a doctor, lawyer, engineer or whatever field you desire to get into you have to go to a school. When you go to a school you have to pay a tuition. Paying tuition for a degree is part of the game. No tuition, no degree. I bring this up because I feel the same principle applies to investing. When I take a loss I am paying tuition. The Market is my University. Losses are inevitable. It's not if they happen its, when they happen. The thing that matters is how you deal with the losses. You can either get emotional about it, lose focus and not change a thing or you can take the loss, evaluate what you did wrong, and learn from your mistakes. Since, I've been trading I've taken a good share of losses. You'll hear about these in the "Flash of the Past" in upcoming posts. I like to also add that there is a proper balance between your loses and gains. This has to do with money management which I'll share in a later post. I'd like to leave you with a thought that I read in a book called “Trading for a Living” by Elder Alexandar. He basically says that engineers don't build bridges and buildings expecting them to collapse. To do so would be stupidity. In the same way we need to treat our portfolio/account the same way. We don't trade expecting to crash and burn. We trade with confidence, but sometimes the unexpected happens which we have no control over. We just need to be ready for whatever comes our way.

Picks
Tomorrow I'm looking to open up a position with RIMM purchasing a strangle Jul 65 call/ Jul 55 Put. In order to enter this trade it will need to be trading within 65 and 55. If it exceeds this I will not enter the position.
The reason I am setting up a strangle for RIMM is because I'm expecting this stock to have major price movement after earnings. If you look at a 2 year chart you can see that most of the times the day after earnings there was a major price movement. If I get in this position I'll most likely exit on Friday.

Flash from the Past
Trade #1
My first trade took place 3/16/10 with CHRW May 50 Call. The reason I set up on this stock was because it was consolidating and it looked like it was going to break out soon.
I entered this trade because my list of follow through rules (I'll explain what this is in an upcoming post)were met. I exited the trade on 3/19/10 using a 3% trailing stop on the underlying stock. The results of this trade was a 13% gain. I learned from this trade that when the criteria of my rules are met. I need to automatically place the trade rather than linger and wait. Had I gone in sooner I would have had more profit.

Current Positions
When I exit these trades, I'll explain why I got into these stock in the first place. I'm just posting what positions I'm in and if there at a gain or loss.

2 Contracts of BP Jul 55 Call- at loss. I'm going to let this stock expire worthless

Strangle
3 Contracts of NKE Jul 80 Call- at loss
3 Contracts of NKE Jul 70 Put- at a profit

Strangle
BBBY Jul 42 Call- at a profit
BBBY Jul 38 Put- at a loss

Current Account Balance
$914.40- Currently at a loss


Well guys I hope the above post made sense to y'all. If it did not please feel free to email me or leave a comment. I'll try to answer you questions to best of my ability. If there is anything you don't understand and would like me to explain please let me know. Meanwhile, I'll continue to figure out ways to make this post better.